August 2014

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BAE Hybrid System Extended Warranty and Maintenance Program

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Operations is seeking approval from the Customer Service Committee to initiate procurement of a BAE Hybrid System Extended Warranty and Maintenance Program for METRO’s ORION bus fleets.

Purpose:

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Background:

METRO purchased 276 diesel hybrid 40ft transit buses from Orion

Bus - Year / Model Order METRO Bus # Quantity

2008 Orion VII NG A Order #1317 3601-3646 46

2009 Orion VII NG B Order #1317 3647-3656 10

2010 Orion VII NG C Order #1317 3657-3696 40

2010 Orion VII NG D Order #1317 4601-4680 80

2011 Orion VII NG A Order #1370 5800-5899 100

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During the initial warranty period METRO experienced significant rates of failure of the BAE HybriDrive propulsion system components: • ACTM - Alternating Current Traction Motor

Induction Machine connected to the wheels via a gearbox and a drive shaft, produces the vehicle propulsion torque

• PCS - Propulsion Control System (control computer for HybriDrive® System)

Power Electronics and Control module. Houses the two inverters that drive the ACTG and ACTM, as well as all the control laws to manage the flow of power between the various components of the propulsion system

• ACTG – Alternating Current Traction Generator

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October 2008 through May 2014 Major Component Replacements

Propulsion System Reliability on Buses 3601-3696, 4601-4680 (TB08)

ACTM PCS ACTG FY2009 3 8 1 FY2010 16 57 2 FY2011 16 25 1 FY2012 6 2 3 FY2013 64 30 5 FY2014 thru May 2014 22 10 3

Total 127 132 15

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Propulsion System Reliability on Buses 3601-3696, 4601-4680 (TB08)

Lifetime Component Replacements (October 2008 thru May 2014)

$4,699,000 $4,791,600

$265,500

ACTM Traction MotorPCS Propulsion ControlACTG Traction Generator

132 15

127

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ACTM Reliability on Buses 3601-3696, 4601-4680 (TB08)

ACTM: 16% of Repairs in last 12 months

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PCS Reliability on Buses 3601-3696, 4601-4680 (TB08)

PCS: 9% of Repairs in last 12 months

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ACTG Reliability on Buses 3601-3696, 4601-4680 (TB08)

ACTG: 3% of Repairs in last 12 months

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Following the original Orion contractual warranty period, METRO entered into a two (2) year extended warranty program with BAE Systems, the Original Equipment Manufacturer (OEM), to provide:

• Diagnostics • On-Site Service (all Metro Bus Operating Facility (BOF) locations) • Parts Repair • Parts Replacement • Parts Shipping • Phone Support • Remove and Replace Labor • Vehicle Towing

The premium for this two-year agreement (CT1300011) was $2,238,720, amortized over the two-year period.

$3,404,000

$1,524,600

$194,700

ACTM Traction MotorPCS Propulsion ControlACTG Traction Generator

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During this extended warranty period METRO has continued to see sustained rates of failure of the covered items. In particular, the above pie chart demonstrates the rates of component failure and their associated costs for the last 21 months of the 24-month contract period.

The following major HybriDrive Propulsion system components installed on the Orion TB08 (Orders A, B, C and D) bus fleets were covered under this agreement, which expires October 31, 2014:

92 42 11

Component Replacements (December 2012 thru May 2014)

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Recommendation: • As the A, B, C and D Orders of 176 Orion buses near mid-life, METRO

fully expects that each of the three (3) major BAE HybriDrive propulsion system components, the Traction Motor, the Traction Generator and the Propulsion Control System components will fail and have to be replaced at least once during the remaining life of each bus.

• METRO staff has determined that the best approach, moving

forward, is to solicit an end-of-life, long term contract for both parts and labor for an Eight (8) Year period.

• The proposed contract would include fixed-rate payment terms, regardless of number of failures.

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• Benefits of the agreement include: • optimizing up-time • availability of the fleet • replacement of the three major components for the warranty end of

life failures at an annual fixed pricing, amortizing METRO’s costs over the remaining life of the fleets.

Baseline Value of Replacing Each Component Once On Each Bus During the Remaining Life Of The Fleet

Traction Motor (ACTM) 176 $36,300 $6,388,800

Propulsion Control System (PCS) 176 $37,000 $6,512,000

Traction Generator (ACTG) 176 $17,700 $3,115,200

Total $16,016,000

• Based on current market value of the unit prices for each of the three

major components, diagnostics, on-site service (all Metro Bus Operating Facility (BOF) locations), parts repair (including overhauls and upgrades), parts replacement, parts shipping, phone support, remove and replace labor and vehicle towing, Metro estimates a total cost of $17,000,000.

• Each estimated annual payment amount of $2,125,000 would constitute

coverage for each of the one year periods between November 1, 2014

(FY2015) and October 31, 2023 (FY2023).

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Questions